An Unlevered Firm Has a Cost of Capital of 12

question 4

Multiple Choice

An unlevered firm has a cost of capital of 12.46 percent and a tax rate of 35 percent.The firm is considering a new capital structure with 35 percent debt.The interest rate on the debt would be 6.68 percent.What would be the firm's levered cost of capital?

• A)14.48%
• B)14.78%
• C)13.90%
• D)14.27%
• E)13.94%